Brands refocus on physical retail as AI disrupts digital customer acquisition

Fashion and beauty brands are turning to physical retail, events, and human services as AI reshapes their digital marketing strategies. During a Brand Leaders dinner hosted by Glossy and Modern Retail, executives discussed the challenges their companies face as digital advertising disrupts e-commerce. One of the biggest topics was AI's impact on the customer journey in 2026.

Many executives are grappling with post-COVID business struggles and scaling challenges. They're finding it difficult to acquire and retain customers as traditional tools like search engine ads and display become less effective due to AI-driven product discovery.

Some brands are turning to in-person and personal connections to diversify their marketing mix. One apparel brand co-founder started hosting parties in their big space, while another organized charity shopping events. A kids' fashion brand organizes family-friendly events with playtime and face painting. Executives believe customers want a human touch, wanting to touch, feel, and get to know the brand teams.

However, opening physical stores is costly, especially in prime locations. Some brands are still relying heavily on wholesale retail, while newer startups struggle to find profitability without founders working long hours.